Insurance Product Development Greg Ricker CPCU v My

Insurance Product Development Greg Ricker, CPCU v

My Background v 15 years working for a large national carrier (in IT) v 14 years working for a specialty lines carrier v 12 years of those as the CIO v Hold the CPCU Designation v Have built, bought, & installed all the systems carriers and wholesalers use in their operations. v Managing Partner for a consulting company helping carriers, wholesalers, and of most recent, retail agencies, with their IT solution needs.

Insurance Product Q - What exactly is an Insurance Product? A - It’s a contract, where, for consideration, risks (losses) are transferred to another. v …It’s all about the T’s and C’s Bottom line – a policyholder is buying claims service.

Decision Makers Ask yourself: 1. ) Who decides what products a company will and won’t have? v 2. ) Why do some companies have products others do not? 3. ) Why have companies decided on the products they have?

Decision Makers Executives CEO/President Chief Marketing Officer Chief Underwriting Officer Chief Claims Officer Management Team Other Stakeholders VP’s of other divisions v Policyholders Actuaries (mutual) Regional Managers Investors Regulators

Where Will Products Be Sold? One of the key questions that must be answered. v

How Will the Products be Sold & Serviced? Retail Agencies Traditional Channel Wholesale Agencies Brokers & General Agents v Direct to Consumer Company Website & Call Centers New Google, Amazon, Facebook, Channels Overstock, and others

What’s Needed to Sell & Service? Transaction Activity • Automated vs Manual Processing Technology Solutions • High Levels of Automation Marketing Solutions • DAC – Direct Acquisition Costs Claims Solutions v

Claims Handling Frequency Severity v Location (Catastrophe areas) Skillsets & Availability of Adjusters

Leverages other v business? Expenses What is and what is not? Area specific Affects Other Lines? Lines Make Money? Claims Operating

Analytics Timely Relevant Distribution v Regularly provided Contain information so decision makers can take action To the right audience

Let’s Build The Product Development Lifecycle Determine Need (ISO Circulars) Define Coverages Pricing Filings Build Systems v Internal Training Marketing Program Rollout Monitor

Determine / Validate The Need Determine Need (ISO Circulars) Define Coverages Pricing Validate Need Review ISO Circulars Filings Build Systems Window of Opportunity Regulatory Sales & Marketing Program Rollout Monitor Be Realistic v Internal Execution Internal Training Many Considerations When Others are Leaving…There Must Be A Reason

Opportunity Roll Out Need v Cost Competition Profit Decision Point at every turn

Timing? Others see too – Can I be better? Can we do it? Whatv. Is The Window Of Opportunity? What if the window changes? Term of the opportunity?

Define Coverages Determine Need (ISO Circulars) Define Coverages Coverage Afforded Pricing Filings Build Systems Internal Training Marketing Program Rollout Monitor • Basic coverage provided (Forms) Can Be Quick, or Timely Optional Coverages • Items not covered (Exclusions) v • Buy additional coverage to cover exposures Forms – May Not Have Case Law Endorsement Forms • Further restrict/define coverage provided Exclusions

Pricing Determine Need (ISO Circulars) Define Coverages Pricing Many Involved Internal Conflict Competitive Landscape May be Only Provider Filings Build Systems ISO Internal Training Marketing Program Competition • Based on v ISO Stats • Street Pricing • Not All Loss Data is Reported to ISO • Optional Coverages, Deductibles, Limits of Insurance Rollout Monitor Actuarial • Carrier specific LCM’s • Needed for Profitability

Pricing My Price Competition’s Price Other (reinsurance) Claim Costs Internal Costs v Claim Costs Internal Costs Constantly Changing Many Variables

Filings Determine Need (ISO Circulars) Define Coverages Pricing Filings ISO Product Build Systems Internal Training Marketing Program Rollout • File product already used • Company Deviations (rates, forms, guidelines) v Specialty “Me Too” • Unique Program • May or may not have to file – it depends • Exact copy of what someone else has filed Monitor

Build Systems Determine Need (ISO Circulars) Define Coverages Pricing Filings Build Systems Internal Training Marketing Program Rollout Monitor Policy & Claims Administration v Statistical Reporting Accounting Document Management & Workflow Filings Claims Handling Web & Mobile Apps Rate/Quote/Bind/Issue End. User Systems Endorsement Cancellation Reinstatement Admin Functions & Tools 3 rd Party Data Retrieval Mobile Phone Web Site & Services

Internal Training Determine Need (ISO Circulars) Define Coverages Pricing Agency Force Filings Build Systems Business Partnersv • Retail Agents Internal Training Marketing Program Rollout Employees • Underwriting • Reinsurers • Wholesale Agents • Customer Service • Intermediaries Monitor

Marketing Program Determine Need (ISO Circulars) Define Coverages Pricing Filings Build Systems Everything Involves IT Need Perfect Execution Marketing Program Rollout Agents Costly Many Ways Internal Training v Prospective Customers Web Comparative Raters Monitor

Rollout Determine Need (ISO Circulars) Define Coverages Pricing Filings Build Systems v Agency Promotion Business Development Reps Internal Training Marketing Program Rollout Boots on the Ground Monitor

Monitor Determine Need (ISO Circulars) Define Coverages Pricing Filings Build Systems Internal Training Marketing Program Rollout Monitor Customer Need Analytics Are Just One Piece Marketing Space Moving v. Competiti Market Share ve Underwriting Profit Seasonal / Mkt Cycles Agency Force Adequate Pricing

Monitoring, In More Detail Profitability Quote Numbers Hit Ratio • Premium, Losses, and Loss Adjustment Expense • Commissions (regular and contingent) • DAC (direct acquisition costs) • Where is business coming from? • How many, and from all the products? • What is sticking? • Why, and where? v Submission Performance • Timely? • Accurate? Claims • Frequency • Severity • Fraud • Litigation Agency Distribution • Per Plan? • Effectiveness of sales

How Long Does This Take? Determine Need (ISO Circulars) January Define Coverages Pricing Build Systems Filings February March Internal Training Marketing Program Rollout April v • It All Depends…. Jan Feb Mar Apr May Jun Jul Aug Sept Oct Monitor

Recent Examples v What are some recent examples?

Vacant Property (2009) Vacant homes (and land), and lots of them. v

Remodeling Contractors (2009) Builders all of the sudden became remodelers From this…. …to this v

3 D Printing (2013) Retail stores have 3 D printers for their customers. v

Cyber Liability (2013) v

Autonomous Vehicles (201 x) v

Drones (2015) v Aviation insurers and others are preparing for an influx in demand for drone-aircraft coverage once final rules gain Federal Aviation Administration approval, possibly within the next year. "Most drone operators are buying legal liability limits of less than $10 million, and at those levels there is abundant capacity in the market, " said Chris Proudlove of Global Aerospace. Business Insurance

Cannabis (2014) v The emerging legal marijuana economy will see explosive growth in the coming years. Insurers should be prepared to adopt policies that spell out coverage for legally grown marijuana plants and medical marijuana property. Property. Casualty 360

Conclusion Knowledgeable • Insurance of what your customer writes • Your Solution Demonstrate how you can helpv • Real-world stories • Get Involved Speak to the right people • Saves Time • Avoid unwanted delays

Thank You v